Fidelity Sticks with Controversial Rollover Ads Aimed
at TSP Members

July 30, 2008 (PLANSPONSOR.com) - TIAA-CREF has
agreed to pull a controversial ad urging federal employees to
roll over their assets from the federal retirement savings
plan without telling the workers they will encounter higher
fees if they do.

The move by TIAA-CREF and a refusal by Fidelity
Investments to stop running a similar ad were sparked by
letters from U.S. Senator Herb Kohl (D-Wisconsin)
demanding the two providers re-examine their marketing
campaigns aimed at members and beneficiaries of
theFederal Thrift Savings Program (TSP).

In addition to Kohl’s contention that the TSP
offers lower fees, a statement from the Senate Special
Committee on Aging quotesGregory Long, Executive Director of the Federal
Retirement Thrift Investment Board, as pointing out that
TSP members are able to leave their money in the fund
when they separate from federal service. Kohl is chairman
of the committee.

“Although these other products may be useful, they
are not always the best choice for every consumer,” Kohl
asserted in his letter to Fidelity CEO, Edward Johnson
III. “In particular, consumers can suffer unnecessary
harm when they choose rollover plans that have higher
fees than their original 401(k) plans. Therefore, it is
of the utmost importance that consumers have complete,
clear and concise information on all the terms of such
products before making any decisions.”

Fidelity indicated in a letter that it would
continue with its rollover ad campaign, which
characterizes TSPs as “old” and encourages participants
to roll over their government accounts to a Fidelity
401(k) or IRA products.

“I applaud TIAA-CREF’s decision to pull the ads,
and am disappointed that Fidelity has not chosen to
follow suit,” said Kohl, in the committee
statement. “The TSP has the lowest administrative
costs of any retirement program in the country and I
think these misleading ads are a disservice to
hard-working public servants.”